COVER STORY
2
CITY OF MILLIONAIRES?
Thailand
Heading towards the creation of another major Malaysian city
Penang
Ipoh Kota Kinabalu Kuala Lumpur
Brunei Johor Bahru
by Hazrul Izwan
Singapore
Perak takes its name from the silvery colour of the rich tin deposits for which it is renowned. Ipoh, the state capital of Perak, is known historically for its tinmining activities. “City of Millionaires” is one of its nicknames referring to the vast fortunes made during the mining era.
Kuching
Indonesia
The world’s tin industry collapsed in the 80’s and forced the once-bountiful state to look into diversification of its economic activities by developing valueadded, resource-linked manufacturing industries as well as boosting its services sector. Figure 1: GDP growth of Northern States in Malaysia, 2006-2010 (%) 10
10.0%
8 6
5.7% 5.4% 4.5%
4 2 0 -2 -4 -6 -8
2010
2009
2008
2007
2006
-10
Legend:
Perak
Penang
Perlis
Kedah
Source: Department of Statistics, Malaysia
According to FDI Markets, Perak (Manjung) was selected as one of the Top 20 Target Cities for FDI 2006-2011 across the oil, coal and natural gas sector.
from Brazil, will invest RM4 billion to build an iron ore distribution centre in Teluk Rubiah, Perak by 2015.
On the property front, Perak is expecting a delivery of around 10,000 new residential units in 2011, up from 4,582 in 2010. According to the National Property Information Centre (NAPIC), delivery of new units has ranged between 6,000 – 9,000 units from 2007 onwards. Strong domestic demand has driven property price growth at an increase of approximately 15% over the In 2010, Perak’s GDP grew by 5.7% past year. last year, a robust growth just second to Penang state. On the foreign direct More than half of the launched units investment (FDI) side, the Perak are situated in the Kinta district where Government was able to induce more its capital, Ipoh City is located. Ipoh is than RM1.43 billion worth of projects situated approximately 200km or two for new investments and RM0.22 billion hours drive to the north of Kuala Lumpur for expansion projects. Perak’s mining on the North-South Expressway. Kinta reputation from the past clearly benefits district’s sales performance in 3Q’11 in positioning them amongst the world’s rose by 2.4% to 21.7% compared with top mining companies for consideration. 3Q’10. Another improvement worthy of note is the gradual decrease in overhang According to FDI Markets , Perak from 30.8% in 2007 to the current range (Manjung) was selected as one of the Top of 24.9%-27.8%. 20 Target Cities for FDI 2006-2011 across the oil, coal and natural gas sector. Vale SA, the world’s largest iron-ore producer (continued next page)
COVER STORY
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Figure 3: Number of Residential Units Launched and Overhang Rate in Perak, 4Q’07-3Q’11p
(from previous page)
(units)
(%)
6,000
35 30.8%
30
5,000
26.2%
25
4,000
The National Physical Plan forecasts Ipoh’s population to reach 1.09 million by 2020. Moving forward, the state government is implementing hard and soft infrastructure improvements on several fronts. Increased accessibility has been taken into account with the potential upgrading of Ipoh’s Sultan Azlan Shah Airport from domestic to international standards with more intercountry direct flights in the future.
15 2,000
10
0
0 3Q’11
Legend:
Units Launched (RHS)
Overhang rate (completed units)
Source: NAPIC p Note : = prelimanary data
With the focused activities of state promotional agencies such as InvestPerak , potential business investors are also introduced to business-friendly incentives such as possible reduction on land premium and selected tax exemptions. The state remains confident that spill-over effects from FDI will have an indirect impact on Further positive outcome can be property sector growth especially in the achieved by tying in the planned residential and commercial sectors. activities with promotion of Tourism Malaysia’s Malaysia My Second Home (MM2H) programme. As of September For more information about investment this year, more than 1,300 participants opportunities in Perak and northern of this long stay visa programme have economic corridor, write to: also purchased a property in Malaysia, amounting to a total transaction of Hazrul Izwan hazrul@malaysiapropertyinc.com RM1.28 billion since 2007.
Figure 2: Sales Performance in Kinta District within 3,6 and 9 months , 3Q’11 Location: Kinta District
3Q ‘10
3Q ‘11
Within 3 months
19.3%
21.7%
Within 6 months
27.0%
ND
Within 9 months
50.3%
ND
Source: NAPIC Note: ND = no data
p
5
3Q’10
1,000
3Q’09
In conjunction with Visit Perak Year 2012, the state government could leverage on this promotional opportunity to promote Perak as an attractive property investment destination
20 3,000
3Q’08
In conjunction with Visit Perak Year 2012, the state government could leverage on this promotional opportunity to promote Perak as an attractive property investment destination.
4Q’07
One of the prominent local projects is The Haven Lakeside Residences, a project surrounded by 280-million-yearold limestone hills and a pristine 4-acre running lake at the foothill, currently operated by Best Western International Hotels. The project consists of three 26-storey luxury condominium blocks with sizes ranging from 968 sq ft - 2,852 sq ft and penthouses of over 3,000 sq. ft. The take up rate for tower 1 and 2 was impressive, with more than 50% local buyers and the remaining made up of buyers from Singapore, Hong Kong, United Kingdom and the Middle East. Through MPI’s Malaysia Property Exhibition in Jakarta, Indonesia last month, tower 3 has received continuous sales enquiries and requests for site visits. At a minimum intrinsic value of RM600 psf, The Haven expects to generate returns of 6% per annum for the first three years.